2008 15th APEC Finance Ministers’ Meeting

Joint Ministerial Statement

5-6 November 2008

TRUJILLO, PERU

Annex - Review of Policy Initiatives

1. The Voluntary Action Plan (VAP) on Freer and More Stable Capital Flows: The APEC Pensions and Annuities Markets Seminar (Chile, New Zealand, Russia and Singapore in 2007)

Since its launch in 2000, this initiative has provided the framework for a range of policy dialogues for APEC economies to better understand and share experience on the benefits and risks associated with cross-border capital flows, policies needed to secure the benefits and reduce risk, an associated issues of implementation and regulation. Previous policy dialogues have addressed: Banking supervision (Mexico, 2001), Strengthening market disciplines in the financial sector (Hong Kong, 2002), Transparency in the financial sector; deposit insurance (Malaysia, 2004), Savings and capital market development (Vietnam, 2006).

The most recent policy dialogue was a seminar held in Singapore in November 2007, co-hosted by New Zealand, Chile, Russia and Singapore, with financial and technical support from the IFM and the World Bank. Discussion focused on factors that could enhance the impact of pension and annuity markets within a comprehensive savings policy. A summary of the proceedings was presented to Finance Deputies.

2. APEC Finance and Development Program (AFDP) (China and the World Bank)

With support from APEC member economies and international financial institutions, the Asia-Pacific Finance and Development Center (AFDC) has continued its efforts on capacity building in the fields of finance and development. By the end of September 2008, 4 forums, 8 seminars and 33 training workshops had been successfully organized by AFDP. More than 3500 people from 20 APEC member economies, comprising government officials, business practitioners and academic scholars, participated in these activities, including 554 of them participated in these events through the GDLN network.

3. Deepening Prudential Regulatory Capacity in Non-Life Insurance (Australia and the US)

This initiative is a training course for non-life insurance regulators in close collaboration with public and private sectors. A six-day intensive course was held in Melbourne, Australia, in September 2007. Australia’s APEC Studies Centre organised the training course in coordination with the US & Vietnam. The core objectives of the training programme were to develop an awareness of the International Association of Insurance Supervisors Core Principles and their implications. The course covered the risks of non-life insurance, reinsurance, especially catastrophic risks, the need for strong corporate governance regimes, and the capacity of regulatory bodies.

4. APEC Future Economic Leaders’ Think Tank (Australia)

The annual Future Economic Leaders’ Think Tank was not held in 2008.

5. APEC Financial Regulators Training Initiative (FRTI) (US and the ADB)

The FRTI has made significant progress in achieving its objectives of strengthening content and management of domestic training programs in developing regional programmes for junior and mid-level banking supervisors and securities regulators. Since 2001 up to September 2008, the initiative has trained 2,297 participants. Each year eight seminars are given – four on banking supervision and three seminars for securities regulation seminars organized under the initiative. The AG members, at their last meeting on 19 September in Manila, Philippines unanimously voted to request the continuation of the initiative for another two years and discussed and agreed on the topics for training seminars for 2009.

6. APEC Financial Institutions Dealing with SMEs (Japan in 2008)

The Japan Finance Corporation for Small and Medium Enterprises (Japan Finance Corporation, Small and Medium Enterprise (SME) Unit, since October 1, 2008) and National Life Finance Corporation (Japan Finance Corporation, Micro Business and Individual Unit, since October 1, 2008) jointly hosted the 5th Annual Meeting of APEC Financial Institutions Dealing with SMEs and the Conference on “SME Finance: Its Diversity – Experience and Challenge in the APEC Region” in Japan on 15 & 16 July, 2008. At the annual meeting, 13 signatory member institutions reported their activities and reaffirmed strengthened cooperation for financial support of SMEs. At the conference, following presentations, there was a fruitful discussion on the future vision of SME finance in the APEC region.

7. Insolvency Reform: Regional Network (Australia)

Phase One of the insolvency reform workshop was implemented through the Forum on Asian Insolvency Reform (FAIR), held on 27-28 April 2006 in Beijing, China.

Phase Two of the initiative involves establishing a Regional Network on Asian Insolvency Reform to share information about reforms, capacity building and technical assistance initiatives for insolvency systems and related matters. In February 2008, the first network newsletter was published and the network website was launched. Arrangements are being made to hold the first meeting of network members in conjunction with the next FAIR in the first half of 2009.

8. Reform of Financial Sector: Catalogue of Policy Experience and Choices (Australia, Indonesia, China, Japan and Vietnam – Australia, Indonesia, China and ADB for Catalogue)

The initiative comprised three policy dialogue workshops held in the People’s Republic of China, Indonesia and Australia. A key outcome of the initiative was the development of a web-based information resource on financial sector reform, the ‘Catalogue of Policy Experience and Choices’. The catalogue is a secure, web-based information resource on financial sector reform experience for finance ministries, central banks and financial sector regulatory agencies in APEC. It allows policy makers and regulators to draw upon the benefit of experience in developing and implementing financial sector reform in accordance with their individual circumstances. The official website went live on 30 April 2008 - http://www.financialreform.apec.org.

9. APEC Policy Response to Ageing issue (Korea, China and the US)

The three-year Initiative on Ageing Issues in APEC (2007-09) is divided into two primary subjects: "Financial Markets and Ageing" and "Public Finance and Othersin Ageing." The first part implemented under the theme of "Financial Markets and Ageing"(2007-2008) constituted of three workshops and a high-level seminar. Seven member economies including, China, Korea, New Zealand, the United States, Chinese Taipei, Thailand, and ABAC, IMF, and OECD participated in this initiative to derive policy recommendations to the region. The results will be combined with the outcome of the second part of the initiative "Public Finance and Othersin Ageing" which will launch in November 2008. The final result, including policy recommendations regarding financial markets, public finance and others in ageing issues in the APEC region will be presented to the Finance Ministers at the 2009 FMM.

10. APEC Public-Private Dialogue on Bond Market Development (ABAC)

This initiative identifies policy and regulatory aspects and capacity building initiatives to enhance the environment particularly for corporate bond issuance. Thefirst forum was held in May 2007 and focused on bond market developments in three economies Indonesia, Vietnam and the Philippines. The dialogue outlined major regional cooperation and capacity building initiatives. A Bond Market Forum was held in Cuzco on the 9th July 2008 focusing on public and private sector perspectives on the development of bond markets in the APEC region, and the challenges for capacity building and prospects for public private partnership. This series of dialogue will continue with other emerging economies in the period ahead.

11. Enhancing Risk management and governance in the region’s banks to implement Basel II (Australia, China, Vietnam)

This initiative will provide training for senior policy makers and banking regulators from APEC developing member economies, in order to enhance risk management and governance practices in the region’s banking systems, based on implementation of Basel ll. The initiative will be a joint undertaking between Australia’s APEC Finance Centre and the Asia Pacific Finance and Development Centre in Shanghai (AFDC). It is timely as it will also consider the handling of liquidity pressures confronting global banking systems. The workshop will be held in Shanghai in December, 2008.

12. Climate Change (World Bank, Australia)

This initiative is expected to provide critical information on the implications of climate change in key areas of concern to finance and other economic ministries, aiming to serve as a catalyst for greater regional discussion and cooperation in addressing climate change. It will also encourage greater mainstreaming of climate change in finance ministries’ agendas and set the stage for future operations on climate change issues both at regional and economy level (technical assistance, training, investment projects, policy lending etc.). It should help strengthen the formulation or implementation of adaptation and mitigation components in climate change strategies; improve dissemination and knowledge management and help build partnerships for knowledge sharing and action at economy, regional and global level.

13. Diversified and sound institutional investor base (Australia, Singapore and Malaysia)

Institutional investors are increasingly playing a key role in global financial markets. Comprising mainly pension funds, insurance companies and investment funds, they help provide depth and liquidity in the markets. Promoting and supporting the development of a well-capitalised, creditworthy and strong functioning institutional investor base is therefore a critical part of any financial market development strategy. The objective of this initiative is to provide technical training to government officers who are responsible for developing policy measures, reforming regulations and addressing key constraints that would help support the development of a diversified and sound institutional investor base in targeted APEC member economies.

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